Reasonable comp at center of dental
practice dispute

In a Massachusetts divorce case, the wife argued that the normalization adjustments to her salary from her dental practice were based on unreliable data. The husband’s valuation expert used data from Salary.com and Indeed.com and adjusted her salary downward for the three past years he used for the valuation (the capitalized cash flow method). The court did not find those sources to be totally unreliable and accepted the adjustments for two of the three years in the analysis. However, the adjustment for the most recent year was rejected because the data did not delineate between a regular dentist and a prosthodontist, which became relevant to the practice during that year. Also, the wife did not offer the opinion of a qualified business valuation expert.

The wife appealed, but the appellate court affirmed the lower court’s decision. It also affirmed a 21% goodwill discount the husband’s valuation expert applied, reflecting the estimated loss of clients that would occur if the wife left the practice.

The case is Kwak v. Bosarth, 2023 Mass. App. Unpub. LEXIS 179; 102 Mass. App. Ct. 1116; 2023 WL 2817904, and a case analysis and full court opinion are on the BVLaw platform.

Big Four eye return-to-office mandate

Last week, we gave you some takeaways from the ASA Fair Value Spring Conference in New York City. During a panel of Big Four leaders, a question was asked that had nothing to do with fair value but was an interesting one: Will you require employees to come into the office? The panel members all noted that they were considering a mandate of two to three days in the office. And they remarked that, to make that work, managers would have to do the same to set the example. Also, they are considering some type of in-office activities that would give a reason for staffers to come in.

Recent study: Myron Marcinkowski (Kroll), who acted as moderator for the panel, mentioned an interesting recent study, “The Power of Proximity,” which reveals some of the potential pitfalls of remote work, especially for young professionals, women, and people of color. The study found that these groups are missing out on crucial feedback from their managers and colleagues—and they are more likely to quit. Remote work has not been able to replicate the in-office experience in this regard, which we would imagine is even more crucial for recent hires going through training.

The panel members included Josh Putnam (Ernst & Young), Manish Choudhary (Deloitte), Martin Mazin (KPMG), and Adam Smith (PricewaterhouseCoopers).

A more detailed recap of the conference is in the June issue of Business Valuation Update.

Reminder: BVR Benchmarking Survey is now live

We’re happy to see a good response so far from BVR’s latest version of its benchmarking survey, which will allow BV practices to see how they stack up against their peers. If you have not taken the survey, the direct link is bvresources.com/2023bvsurvey. The deadline for participating is June 30. All responses will be confidential, but we will give survey respondents the opportunity to participate in rankings that identify top-performing practices. Participants will get a free executive summary, a discount on the full study, and some other perks. The survey collects the most comprehensive data on operations, financial metrics, compensation, staffing, marketing, billing, tools and resources used, and more.

BV agenda released for ASA Conference in New Orleans October 1-3

The American Society of Appraisers (ASA) has posted the business valuation discipline track sessions for this year’s International Appraisers Conference to be held October 1-3 in New Orleans. Sessions include an inflation update on cost of capital; environmental, social, and governance (ESG); buy-sell agreements; SAFE investments; new research on long-term growth, intangibles, goodwill; and much more. The full conference brings together appraisers of all disciplines, and there are also some preconference courses and events, including a golf outing. This will be a hybrid event (in-person and livestreamed), and early-bird pricing is currently available. For details and to register, click here.

2022 Thomas Burrage Award recipient named

The late Thomas Burrage was highly respected for his expertise in litigation, forensic accounting, business valuation, and taxation, but he is remembered most as a kind and generous man who gave back to the profession. In that spirit, the 2022 Burrage Award for compassion, collegiality, and character has been bestowed upon Ron Seigneur (Seigneur Gustafson LLP), a veteran practitioner who has given back to the profession through his volunteering on committees, writing books and articles, speaking at conferences, and much more. The award was given by the Expert Resource Connection, co-founded by Burrage, which is a group of business valuation and forensic accounting professionals who share resources and collaborate on engagements.

As part of the award, a scholarship of $2,000 has been presented to an accounting student at the University of New Mexico (UNM). Burrage was also known for giving his support and guidance to young people in the profession, and UNM was his alma mater. If anyone is interested in making a tax-deductible donation to the Burrage Scholarship Fund, please send a check payable to:

The Thomas F. Burrage Scholarship Fund
Attn: Pam Marion, Seigneur Gustafson LLP
940 Wadsworth Blvd., Suite 200
Lakewood, CO 80214

NACVA to publish a new BV book

The National Association of Certified Valuators and Analysts (NACVA) will publish Business Valuation: Practitioner’s Guide to Valuing Privately Held Businesses later this year through Wiley. The book has an impressive list of co-authors who are also NACVA faculty, instructors, board members, and advisors (the list is included in the COO’s 1Q23 report, which is available here).

Valuing breweries in Canada

In a video, Spencer Gunning, CBV, with Big Rock Brewery in Canada, talks about the latest trends and insights in the brewery industry with Catalina Miranda of the CBV Institute. Gunning also wrote an article on the topic, the latest in a series of “CBV Insights,” which you can read if you click here. Valuers in this sector need to assess how the subject brewery is adapting to recent trends, including a “growing demand for craft beverages, a significant shift in market share towards ready-to-drink (RTD) and low-alcohol and non-alcoholic options, and an increased focus on sustainable brewing and packaging practices,” Gunning writes.

Reminder: Comments due on exposure draft for updated IVS

The International Valuation Standards Council (IVSC) has published an exposure draft outlining proposed updates to the International Valuation Standards (IVS). To download the draft, click here. The public comment period will last for three months and will end July 28. An updated version of IVS is expected to be published in January 2024 with an effective date of July 2024. During the comment period, interested parties can submit comments through the IVSC’s online consultation platform or via email to the IVSC technical director, Alexander Aronsohn (aaronsohn@ivsc.org). The exposure draft includes IVS updates that address various factors, such as ongoing changes in global markets and valuation practices, increasing use of technology and data sources, growing demand for clarity in valuation processes, and the need to address new types of assets and liabilities, including environmental, social, and governance (ESG) factors.

What’s in the June issue of Business
Valuation Update

Here’s what you’ll see:

• “Damages Guide Editors Offer Insights and Advice to Valuers” (BVR Editor). Business Valuation Update had the pleasure of sitting down with the editors of the recently published 7th edition of BVR’s Comprehensive Guide to Economic Damages. They gave some insights into recent developments and some advice for experts who practice—or are thinking of practicing—in this area.

• “BVR to Identify Top-Performing BV Firms and Practices” (BVR Editor). Since 2007, Business Valuation Resources has been surveying BV firms and practices, collecting the most comprehensive data on operations, financial metrics, compensation, staffing, marketing, billing, resources used, and more. BVR is launching the latest version of this survey—with a new twist.

• “Takeaways From the Record-Breaking ASA New York Fair Value Conference” (BVR Editor). In-person capacity was sold out, and virtual attendance brought the total to about 300—a new attendance record—for the ASA Spring Fair Value Conference in New York City May 4. Topics included inflation impacts on valuation, audit targets, the new AICPA business combinations guide, ESG, PE valuations, and more.

• “Damodaran Continues His Explosive Remarks About ESG” (BVR Editor). At the ASA Spring Fair Value Conference in New York City on May 4, we did not expect to hear any glowing words about the environmental, social, and governance (ESG) movement from Professor Aswath Damodaran (New York University Stern School of Business). In his blog, he has been very vocal in his strong criticisms of ESG as a “weapon of mass distraction” and a “gravy train” for consultants, investment managers, scoring/ratings providers, and those pushing for more disclosures.

• “New Valuation Credential Set to Launch for Healthcare Compensation Experts” (BVR Editor). The American Association of Provider Compensation Professionals (AAPCP) is set to unveil the Certified in Provider Compensation Valuation (CPCV) credential this summer. The news was announced at the AAPCP’s annual conference in Nashville April 26-28. A number of valuation professionals have already signed up for the training courses.

• “Valuers Run the Risk of Mismatching Inflation Assumptions” (BVR Editor). During a presentation in the United Kingdom, Nick Forrest (UK Economics Leader for PwC) made some observations that should resonate with business valuers worldwide. In the UK, the Bank of England established its target inflation rate of 2%, but inflation varies hugely from this target, even during noninflationary periods, depending on which factor an analyst uses.

The issue also includes:

• A full section of “BV News and Trends/Global BV News and Trends”;

• Regular features: “Ask the Experts” and “Tip of the Month”;

• BV data spotlight: “DealStats MVIC/EBITDA Trends,” “FactSet Mergerstat/BVR Control Premium Study,” “Economic Outlook for the Month,” and the “Cost of Capital Center”; and

• BVLaw Case Update: The latest court cases that involve business valuation issues with one case featured in a detailed analysis.

To stay current on business valuation, check out the June 2023 issue of Business Valuation Update.

BV movers . . .

People: Kevin M. Zanni, ASA, CBA, CVA, CFE, CEIV, has joined Chicago-based Miller Cooper as a principal and director of valuation services; he has been a valuation analyst for more than 20 years, and his expertise includes valuation analyses for purposes of tax planning and compliance, transaction due diligence, financial accounting and reporting, and forensic analysis and dispute resolution.

Firms: San Ramon, Calif.-based Armanino LLP enters into the marketing business with the launch of its new Strategic Marketing Outsourcing (SMO) service that will provide a turnkey “Office of the CMO” solution in response to the growing demand from firms seeking to outsource operations outside of their core business focus … New York City-based EisnerAmper has a new website that uses advanced “grid-builder” technology, which allows for content layout to be customized to meet the needs and content consumption for each of the firm’s industries and service lines represented … New York City-based Schulman Lobel LLP has acquired the tax compliance division of DFP Partners and merged with Tanton Grubman CPAs LLP and Steinberg Shebairo LLP, also in New York City.

Please send your professional and firm news to us at editor@bvresources.com.

CPE events

• Professional Liability Risk Management for Valuation Professionals. May 17, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Steven Platau (University of Tampa). CPE credits: 2.0.

This session breaks down sources of professional liability claims, best practices to avoid or mitigate lawsuits, and how to best utilize risk management strategies.

• Calculating Damages for Early-Stage Companies. May 25, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Neil J. Beaton (Alvarez & Marsal). CPE credits: 2.0.

Damages experts walk a thin line between speculation and reasoned analysis when dealing with early-stage companies. This webinar will explore a number of credible techniques that experts can utilize to measure and/or estimate damages for new or early-stage businesses.